This week has been filled with legislation, both on the federal and the state level. Two Senate Committees approved significant financial reform legislation this week, paving the way for the sweeping financial reforms long discussed to head to the Senate floor. The Restoring American Financial Stability Act (S 3127), introduced by Senate Banking Committee Chairman Chris Dodd (D-CT), would establish the Consumer Financial Protection Agency (CFPA) as well as the requirement that lenders retain a portion of every mortgage sold or securitized passed the Senate Banking Committee.
Meanwhile, the Senate Agricultural Committee published the Wall Street Transparency and Accountability Act of 2010. Introduced by its chair, Senator Blanche Lincoln (D-AR), the bill would mandate clearing and trading requirements, require the real-time reporting of derivatives, and prohibit the FDIC from providing bailout funds to financial firms that engage in “risky derivatives deals.”
On a state level, Arizona House Bill 2242 was passed by the Arizona House of Representatives by a vote of 41-14 with 5 abstentions on Tuesday and sent to the Governor for her signature. The Senate had already approved the bill, sponsored by Rep. Bill Konopnicki, last week.
HB 2242 requires that prospective borrowers receive counseling from an independent third party who is not affiliated with the reverse mortgage originator or lender. In addition, the bill requires that at least ten days before closing the originator provide the borrower with a statement informing the borrower that his/her liability under a reverse mortgage is limited and outlining the borrowers rights, obligations and remedies with respect to the reverse mortgage loan. It is explicitly stated in the legislation that these include temporary absences from the home, late payments, and payment default by the originator. Finally, the lender is required to disclose all costs charged by the originator in writing.
Back in March, NRMLA had spoken of the need to amend the bill. The Senate introduced several amendments, which were also approved by the House, since that time. These include amendments allowing a lump sum dispersal of proceeds from a reverse mortgage, allowing the property securing the reverse mortgage to be held in trust, and allowing the lender to offer or refer a borrower for title, hazard, flood or other peril insurance, as well other products that are customary under a reverse mortgage loan. This addition is similar to that in the Maryland legislation that was passed last week.
Written by Reva Minkoff